The Royal Australian Navy can keep its troubled submarine fleet in service an extra seven years because the vessels have spent so much time out of the sea being repaired.

The second instalment of a review of the fleet by John Coles published yesterday found systemic failings over 17 years had bedevilled the submarines and left only one or two available at times.

A separate analysis for the Defence Department says the first of the Collins class subs will not have to be retired until 2032 instead of the current 2025. It gives Defence Minister Stephen Smith extra time to make a decision on the next generation of submarines, which could cost up to $36 billion.

“It shows that there is no reason why that life of service could to be extended for one full operating cycle, some seven years excluding a period of full or deep maintenance,’’ Mr Smith said.

Defence sources said the review should be enough to ensure the government rules out using an updated Collins as the model for a new submarine.

But Mr Smith declined to rule out the option of proceeding with an updated Collins submarine for Australia’s new submarine even though the report found their performance among the worst of comparable navies.

Defence sources said one of the reasons the Collins life could be extended was because the submarines spend so much time out of the water due to frequent systems failures and reduced wear and tear on the hulls.

Releasing the second phase of the Coles review of the troubled fleet, Mr Smith said the submarines fell short of acceptable international performance benchmarks but that did not mean he should rule out the Collins as the starting point for the new submarine project.

Mr Coles said the submarines, of which less than two are available at times, spend on average a third more time in maintenance.

Mr Coles’ report blames the lack of an overall maintenance plan for the fleet since its inception in 1996, lack of a performance-based ethos within the Navy and ASC and unclear lines of responsibility between the Defence Material Organisation, the Navy and Adelaide submarine maintainer ASC as all contributing to the poor maintenance performance.

He made 25 recommendations aimed at improving reliability and performance and set out a plan to ensure the Collins class met international standards by 2016.

“The current availability of the Collins class submarines is poor in absolute terms and relative to the performance of comparable submarines operated by other Navies,’’ he wrote.

Australia should have three or four submarines available to the Navy fleet commander at one time, he wrote.

“Reliability has been the poor relation and will need far more serious attention and resources,’’ he wrote.

Mr Coles recommended the Navy should aim to have two submarines available all the time, three submarines 90 per cent of the time and four submarines 50 per cent of the time.

Australian Strategic Policy Institute analyst Andrew Davies said the report pointed overwhelmingly to management failings rather than problems with the subs that could not be fixed, meaning the updated Collins should remain in contention.

A defence analysis released with the Coles review found that the operational life of the Collins class of 28 years could be extended by up to seven years.

Mr Smith also announced a submarine land-based test site will be built in South Australia, making an “irresistible" case for future submarines to be built in South Australia, Premier Jay Weatherill says.

The test site will enable some prospective on-board systems including propulsion and drive systems to be tested on land rather than problems emerging after installed in the vessels.

The $100 million site decision is good news for South Australia, which has been battered by significant job losses at the local General Motors plant, the deferral of BHP’s Olympic Dam expansion and the loss of the state’s triple-A credit rating.